Spark Networks(R) Reports Fourth Quarter and Full Year 2012 Financial ResultsBEVERLY HILLS, CA -- (Marketwire - March 07, 2013) - Spark Networks, Inc. (NYSE MKT: LOV)
- Company-wide 2012 revenue increased 27% to $61.7 million
- Christian Networks 2012 revenue increased 101% to $31.6 million
- Q4 company-wide average paying subscribers(1) grew 31% to 279,000
- Q4 Christian Networks average paying subscribers grew 80% to 168,000
Spark Networks, Inc. (NYSE MKT: LOV), a leader in creating niche-focused brands that build and strengthen the communities they serve, today reported financial results for the fourth quarter and full year ended December 31, 2012.
Financial Highlights
Q4 2012 Full Year 2012
---------------- ----------------
Revenue $ 16.3 Million $ 61.7 Million
Contribution Margin 23% 26%
Net Loss $ (10.5) Million $ (15.0) Million
Net Loss Per Share $ (0.51) $ (0.72)
Management Commentary
"I am proud of our 2012 performance, which was punctuated by a fourth quarter that marked our best of the year," said Greg Liberman, Spark Networks' President and Chief Executive Officer. "Revenue increased 27%, fueled by a 32% increase in average paying subscribers. That growth was driven by our category-leading Christian Networks segment, where we doubled both revenue and average paying subscribers. We also strengthened our leadership position in the Jewish Networks segment, anchored by the iconic JDate brand, where we exited 2012 with two consecutive quarters of sequential subscriber growth and our first sequential revenue increase since the fourth quarter of 2010. And, importantly, we did so while maintaining the segment's consistent, nearly 90%, contribution margin."
"Looking ahead, we will continue to focus on strengthening our brands and leadership positions in both the Christian and Jewish Networks segments. And, as pleased as we are with our accomplishments in 2011 and 2012, we are even more excited about the opportunities that lie ahead."
Financial Results
Revenue in the fourth quarter of 2012 was $16.3 million, an increase of 27% compared to the year ago period, and an increase of 3% compared to the prior quarter. Full year 2012 revenue was $61.7 million, also a 27% increase compared to 2011. The Christian Networks segment was the primary driver of that growth.
Contribution(2) in the fourth quarter of 2012 was $3.7 million, a decrease of 29% compared to the year ago period, and a decrease of 5% compared to the prior quarter. Full year 2012 contribution was $16.1 million, a 29% decrease compared to 2011. Our increased marketing investment in the Christian Networks segment was responsible for the declines in contribution.
Total cost and expenses in the fourth quarter of 2012 were $18.9 million, an increase of 40% compared to the year ago period, and an increase of 2% compared to the prior quarter. Full year 2012 total cost and expenses were $70.9 million, a 43% increase compared to 2011. Our increased marketing investment in the Christian Networks segment drove the majority of growth in total cost and expenses.
Net loss in the fourth quarter of 2012 was $10.5 million, or $0.51 per share, compared to a net loss of $1.1 million, or $0.05 per share, in the year ago period, and a net loss of $1.7 million, or $0.08 per share, in the prior quarter. Full year 2012 net loss was $15.0 million, or $0.72 per share, compared to a net loss of $1.6 million, or $0.08 per share, in 2011. In the fourth quarter of 2012, the Company recorded an $8.9 million valuation allowance against its deferred tax assets in accordance with guidance described under ASC-740.
Adjusted EBITDA(3) in the fourth quarter of 2012 was a loss of $2.0 million, compared to a profit of $1.0 million in the year ago period and a loss of $2.0 million in the prior quarter. Full year 2012 Adjusted EBITDA was a loss of $6.7 million, compared to a profit of $2.6 million in 2011.
Total average paying subscribers in the fourth quarter of 2012 were 279,260, an increase of 31% compared to the year ago period and an increase of 5% compared to the prior quarter. Full year 2012 average paying subscribers were 259,244, a 32% increase compared to 2011. The growth in our Christian Networks average paying subscribers drove the total Company average paying subscriber increases.
Balance Sheet, Cash, Debt
As of December 31, 2012, the Company had cash and cash equivalents of $10.5 million, a decrease of 31% from $15.1 million at December 31, 2011. As of December 31, 2012, the Company had no outstanding debt.
Segment Reporting(4) During the first quarter of 2012, the Company changed its financial reporting to include data on two newly-defined operating segments, leaving two of the previous operating segments intact. The two new segments are Christian Networks and Other Networks. Christian Networks consists of ChristianMingle.com, ChristianMingle.co.uk, ChristianMingle.com.au, Believe.com, ChristianCards.net, ChristianDating.com, DailyBibleVerse.com, and Faith.com. Other Networks consists of Spark.com and related other general market Web sites, as well as other properties, which are primarily composed of sites targeted towards various religious, ethnic, geographic and special interest groups. The composition of our Jewish Networks and Offline and Other Businesses segments remain unchanged.
SPARK NETWORKS, INC.
QUARTERLY SEGMENT RESULTS FROM OPERATIONS
(in thousands except subscriber information)
Q4 '12
vs.
Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q4 '11
-------- -------- -------- -------- -------- -------
Net Revenue
Jewish Networks $ 6,700 $ 6,580 $ 6,452 $ 6,385 $ 6,617 -1.2%
Christian
Networks 4,952 6,853 7,505 8,495 8,721 76.1%
Other Networks 1,104 1,031 995 903 836 -24.3%
Offline & Other
Businesses 105 91 94 88 97 -7.6%
-------- -------- -------- -------- -------- -------
Total Net
Revenue $ 12,861 $ 14,555 $ 15,046 $ 15,871 $ 16,271 26.5%
Direct Marketing
Expenses
Jewish Networks $ 929 $ 801 $ 647 $ 829 $ 834 -10.2%
Christian
Networks 6,303 9,795 9,205 10,920 11,480 82.1%
Other Networks 354 312 251 213 201 -43.2%
Offline & Other
Businesses 49 30 37 29 69 40.8%
-------- -------- -------- -------- -------- -------
Total Direct
Mktg. Expenses $ 7,635 $ 10,938 $ 10,140 $ 11,991 $ 12,584 64.8%
Contribution
Jewish Networks $ 5,771 $ 5,779 $ 5,805 $ 5,556 $ 5,783 0.2%
Christian
Networks (1,351) (2,942) (1,700) (2,425) (2,759) -104.2%
Other Networks 750 719 744 690 635 -15.3%
Offline & Other
Businesses 56 61 57 59 28 -50.0%
-------- -------- -------- -------- -------- -------
Total
Contribution $ 5,226 $ 3,617 $ 4,906 $ 3,880 $ 3,687 -29.4%
Average Paying
Subscribers
Jewish Networks 87,101 86,433 84,348 84,650 85,736 -1.6%
Christian
Networks 93,357 124,158 137,768 154,747 168,394 80.4%
Other Networks 31,940 30,115 28,818 26,678 25,130 -21.3%
-------- -------- -------- -------- -------- -------
Total Avg.
Paying
Subscribers(5) 212,398 240,706 250,934 266,075 279,260 31.5%
ARPU
Jewish Networks $ 25.12 $ 24.99 $ 24.77 $ 24.61 $ 24.93 -0.8%
Christian
Networks 16.44 17.35 17.13 17.26 16.43 -0.1%
Other Networks 10.74 10.77 10.36 10.61 10.36 -3.6%
-------- -------- -------- -------- -------- -------
Total ARPU(6) $ 19.14 $ 19.27 $ 18.92 $ 18.93 $ 18.49 -3.4%
SPARK NETWORKS, INC.
ANNUAL SEGMENT RESULTS FROM OPERATIONS
(in thousands except subscriber information)
12 Mos. 2011 12 Mos. 2012 2012 v. 2011
------------- ------------- ------------
Net Revenue
Jewish Networks $ 27,054 $ 26,034 -3.8%
Christian Networks 15,742 31,574 100.6%
Other Networks 4,925 3,765 -23.6%
Offline & Other Businesses 772 370 -52.1%
------------- ------------- ------------
Total Net Revenue $ 48,493 $ 61,743 27.3%
Direct Marketing Expenses
Jewish Networks $ 3,389 $ 3,111 -8.2%
Christian Networks 19,356 41,400 113.9%
Other Networks 2,467 977 -60.4%
Offline & Other Businesses 512 165 -67.8%
------------- ------------- ------------
Total Direct Mktg. Expenses $ 25,724 $ 45,653 77.5%
Contribution
Jewish Networks $ 23,665 $ 22,923 -3.1%
Christian Networks (3,614) (9,826) -171.9%
Other Networks 2,458 2,788 13.4%
Offline & Other Businesses 260 205 -21.2%
------------- ------------- ------------
Total Contribution $ 22,769 $ 16,090 -29.3%
Average Paying Subscribers
Jewish Networks 89,429 85,292 -4.6%
Christian Networks 71,311 146,267 105.1%
Other Networks 35,595 27,685 -22.2%
------------- ------------- ------------
Total Avg. Paying Subscribers 196,335 259,244 32.0%
ARPU
Jewish Networks $ 24.72 $ 24.83 0.4%
Christian Networks 17.38 17.01 -2.1%
Other Networks 10.96 10.53 -3.9%
------------- ------------- ------------
Total ARPU $ 19.89 $ 19.01 -4.4%
Investor Conference Call
The Company will discuss its financial results during a live teleconference today at 1:30 p.m. Pacific time.
Toll-Free (United States): 1-877-407-0789
International: 1-201-689-8562
In addition, the Company will host a webcast of the call which will be accessible in the Investor Relations section of the Company's website at www.spark.net or by clicking http://investor.spark.net.
A replay will begin approximately three hours after completion of the call and run until March 21, 2013.
Replay
Toll-Free (United States): 1-877-870-5176
International: 1-858-384-5517
Passcode: 409224
Safe Harbor Statement:
This press release contains forward-looking statements. Any statements in this news release that are not statements of historical fact may be considered to be forward-looking statements. Written words, such as "may," "will," "expect," "believe," "anticipate," "estimate," "intends," "goal," "objective," "seek," "attempt," or variations of these or similar words, identify forward-looking statements. By their nature, forward-looking statements and forecasts involve risks and uncertainties because they relate to events and depend on circumstances that will occur in the near future. There are a number of factors that could cause actual results and developments to differ materially, including, but not limited to our ability to: attract members; convert members into paying subscribers and retain our paying subscribers; develop or acquire new product offerings and successfully implement and expand those offerings; keep pace with rapid technological changes; maintain the strength of our existing brands and maintain and enhance those brands and our dependence upon the telecommunications infrastructure and our networking hardware and software infrastructure; and obtain financing on acceptable terms. For a discussion of these and further risks and uncertainties, please see our filings with the Securities and Exchange Commission. We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any reports, statements or other information that we file at the SEC's public reference room at 100 F Street, N.E., Washington, D.C., 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our public filings with the SEC also are available from commercial document retrieval services and at the Web site maintained by the SEC at http://www.sec.gov.
About Spark Networks, Inc.:
The Spark Networks portfolio of consumer Web sites includes, among others, JDate®.com (www.jdate.com), ChristianMingle®.com (www.christianmingle.com), Spark®.com (www.spark.com), BlackSingles.com® (www.blacksingles.com), and SilverSingles®.com (www.silversingles.com).
(1) "Average paying subscribers" are defined as individuals who have paid a monthly fee for access to communication and Web site features beyond those provided to our members. Average paying subscribers for each month are calculated as the sum of the paying subscribers at the beginning and end of the month, divided by two. Average paying subscribers for periods longer than one month are calculated as the sum of the average paying subscribers for each month, divided by the number of months in such period.
(2) "Contribution" is defined as revenue, net of credits and credit card chargebacks, less direct marketing. "Contribution Margin" is defined as Contribution divided by revenue, net of credits and credit card chargebacks.
(3) The Company reports Adjusted EBITDA as a supplemental measure to generally accepted accounting principles ("GAAP"). This measure is one of the primary metrics by which we evaluate the performance of our businesses, budget, forecast and compensate management. We believe this measure provides management and investors with a consistent view, period to period, of the core earnings generated from on-going operations and excludes the impact of: (i) non-cash items such as stock-based compensation, asset impairments, non-cash currency translation adjustments related to an inter-company loan and (ii) one- time items that have not occurred in the past two years and are not expected to recur in the next two years, such as the Scheme of Arrangement. Adjusted EBITDA should not be construed as a substitute for net income (loss) (as determined in accordance with GAAP) for the purpose of analyzing our operating performance or financial position, as Adjusted EBITDA is not defined by GAAP.
"Adjusted EBITDA" is defined as earnings before interest, taxes, depreciation, amortization, stock-based compensation, impairment of long-lived assets, non-cash currency translation adjustments for inter-company loans and the income (loss) recognized from non-cash assets received in connection with a legal judgment.
(4) In accordance with Segment Reporting guidance, the Company's financial reporting includes detailed data on four separate operating segments. The Jewish Networks segment consists of the Company's JDate.com, JDate.co.il, JDate.fr, JDate.co.uk and Cupid.co.il Web sites and their respective co-branded Web sites. The Christian Networks segment consists of the Company's ChristianMingle.com, ChristianMingle.co.uk, ChristianMingle.com.au, Believe.com, ChristianCards.net, ChristianDating.com, DailyBibleVerse.com and Faith.com Web sites. The Other Networks segment consists of Spark.com and related other general market Web sites as well as other properties which are primarily composed of sites targeted towards various religious, ethnic, geographic and special interest groups. The Offline & Other Businesses segment consists of revenue generated from offline activities and HurryDate events and subscriptions.
(5) Total Average Paying Subscribers excludes results from the Company's HurryDate business due to its relative size.
(6) ARPU is defined as average revenue per user. Total ARPU excludes results from the Company's HurryDate business due to its relative size.
(Consolidated financial statements to follow)
SPARK NETWORKS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
December 31, December 31,
------------ ------------
2011 2012
------------ ------------
Assets
Current assets:
Cash and cash equivalents $ 15,106 $ 10,458
Restricted cash 958 1,232
Accounts receivable 1,146 1,510
Deferred tax asset - current 44 8
Prepaid expenses and other 1,164 861
------------ ------------
Total current assets 18,418 14,069
Property and equipment, net 2,839 3,133
Goodwill 8,683 8,861
Intangible assets, net 1,900 2,143
Deferred tax asset - non-current 5,641 5
Deposits and other assets 455 153
------------ ------------
Total assets $ 37,936 $ 28,364
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 952 $ 1,093
Accrued liabilities 4,046 5,339
Deferred revenue 5,723 8,128
Deferred tax liability - current 203 257
------------ ------------
Total current liabilities 10,924 14,817
Deferred tax liability 1,219 1,413
Other liabilities non-current 1,141 588
------------ ------------
Total liabilities 13,284 16,818
Commitments and contingencies
Stockholders' equity:
Authorized capital stock consists of 100,000,000
shares of Common Stock, $0.001 par value;
issued and outstanding: 20,945,364 shares at
December 31, 2012 and 20,594,670 shares at
December 31, 2011: 21 21
Additional paid-in-capital 53,014 54,857
Accumulated other comprehensive income 672 712
Accumulated deficit (29,055) (44,044)
------------ ------------
Total stockholders' equity 24,652 11,546
------------ ------------
Total liabilities and stockholders' equity $ 37,936 $ 28,364
============ ============
SPARK NETWORKS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share data)
Three Months Ended
December 31, Years Ended December 31,
-------------------- -------------------------------
2011 2012 2010 2011 2012
--------- --------- --------- --------- ---------
Revenue $ 12,861 $ 16,271 $ 40,851 $ 48,493 $ 61,743
Cost and expenses:
Cost of revenue
(exclusive of
depreciation shown
separately below) 8,420 13,491 13,749 28,955 49,216
Sales and marketing 1,062 1,015 3,496 3,722 3,991
Customer service 539 647 1,601 1,980 2,534
Technical
operations 281 296 1,232 1,367 1,363
Development 643 797 3,092 2,710 3,346
General and
administrative 1,071 2,237 9,782 8,068 8,787
Depreciation 343 431 962 1,320 1,673
Amortization of
intangible assets 89 - 421 370 13
Impairment of long-
lived assets and
other assets 1,100 - 308 1,145 -
--------- --------- --------- --------- ---------
Total cost and
expenses 13,548 18,914 34,643 49,637 70,923
Operating (loss)
income (687) (2,643) 6,208 (1,144) (9,180)
Interest (income)
expense and other,
net 144 (188) (54) 162 (238)
--------- --------- --------- --------- ---------
(Loss) income before
income taxes (831) (2,455) 6,262 (1,306) (8,942)
Provision (benefit)
for income taxes 277 8,083 2,558 305 6,047
--------- --------- --------- --------- ---------
Net (loss) income $ (1,108) $ (10,538) $ 3,704 $ (1,611) $ (14,989)
========= ========= ========= ========= =========
Net (loss) income per
share--basic and
diluted $ (0.05) $ (0.51) $ 0.18 $ (0.08) $ (0.72)
========= ========= ========= ========= =========
Weighted average
shares outstanding -
basic 20,595 20,816 20,586 20,591 20,781
Weighted average
shares outstanding
-diluted 20,595 20,816 20,590 20,591 20,781
Stock-based compensation:
(in thousands)
Three Months Ended
December 31, Year Ended December 31,
------------------- -----------------------------
2011 2012 2010 2011 2012
--------- --------- --------- --------- ---------
Cost of revenue $ 2 $ 2 $ 11 $ 8 $ 8
Sales and marketing 15 21 233 80 76
Customer service - 1 1 - 2
Technical operations 31 29 167 119 118
Development 10 11 54 42 42
General and administrative 125 150 1,044 657 567
Reconciliation of Net
Loss (Income) to
Adjusted EBITDA: Three Months Ended Years Ended
(in thousands) December 31, December 31,
-------------------- -------------------------------
2011 2012 2010 2011 2012
--------- --------- --------- --------- ---------
Net (loss) income $ (1,108) $ (10,538) $ 3,704 $ (1,611) $ (14,989)
Interest 13 16 207 102 59
Taxes 277 8,083 2,558 305 6,047
Depreciation 343 431 962 1,320 1,673
Amortization 89 - 421 370 13
--------- --------- --------- --------- ---------
EBITDA (386) (2,008) 7,852 486 (7,197)
Stock-based
compensation 183 214 1,510 906 813
Impairment of long-
lived assets and
other assets 1,100 - 308 1,145 -
Non-cash currency
translation
adjustments 132 (201) (269) 337 (124)
Non-repetitive
property possession - - - (247) (151)
--------- --------- --------- --------- ---------
Adjusted EBITDA $ 1,029 $ (1,995) $ 9,401 $ 2,627 $ (6,659)
========= ========= ========= ========= =========
For More Information
Investors:
Addo Communications
Laura Foster, Kimberly Esterkin
lauraf@addocommunications.com; kimberlye@addocommunications.com
310-829-5400
